S&P likes City Council’s financial management

Wellington City Council’s credit profile is considered
by ratings agency Standard and Poor’s to be better than
that of the Crown.

The international agency last
week reaffirmed the City Council’s AA credit rating –
which allows the Council to borrow at low interest rates and
thus save significant amounts of money.

“We view
Wellington City's stand-alone credit profile to be higher
than the New Zealand sovereign, but have capped the ratings
at the sovereign level,” the S&P review says.

S&P
perceives the institutional framework within which New
Zealand local government operates “as being one of the
strongest and most predictable globally.

“This
provides a source of credit strength that allows Wellington
City to support higher debt burdens than some of its
international peers can tolerate.

“We consider [the
level of indebtedness] to be average to below average among
New Zealand councils.”

The City Council has “very
strong financial management and budgetary flexibility,
strong budgetary performance and liquidity and low
contingent liabilities”.

Councillor Justin Lester,
the Chair of the Council’s Governance, Finance and
Planning Committee, says Council Chief Executive Kevin
Lavery, his senior managers and finance team deserve
congratulations for the rating report.

“It really
is a huge endorsement of what Standard and Poor’s calls
the Council’s excellent financial management.”

Cr Lester says S&P considers the Council’s
asset-management strategies to be sophisticated and that
they are inextricably linked to the Council’s financial
management tools.

Mayor Celia Wade-Brown says
Standard and Poor’s “rightly” points out that future
credit ratings will depend on decisions made in the
Council’s upcoming Long-Term Plan.

“I welcome
the view that Wellington City’s credit strength and
institutional framework will allow higher debt burdens as we
progress our strategy to invest in projects to grow the
Capital’s economy. Wellington’s debt profile compares
favourably with other councils in New Zealand, so we’re in
a strong position to invest,” she said.

“This
praise from Standard and Poor’s matches the recent
comments by the deputy Auditor General that Wellington City
is a ‘shining exemplar’ for infrastructure
management.”

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